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UPDATE: FOX News, citing unnamed sources, has reported that Alibaba is targeting Sept. 16 for its IPO, but that has yet to be confirmed by the company.
No final decision has been made regarding the Alibaba IPO date, but Alibaba officials have said they'll wait until after the Labor Day holiday (Sept. 1) to hold the massive initial public offering.
That's given us an updated timeline into one of the biggest IPOs of all time...
The Alibaba Group Holding Ltd. (NYSE: BABA) IPO could raise as much as $20 billion, making it the largest initial public offering in U.S. history. Currently, Visa Inc. (NYSE: V) holds the U.S. record with its $19.65 billion IPO from 2008. Facebook Inc. (Nasdaq: FB) held the largest ever tech IPO when it raise $16 billion in 2012.
For an initial public offering of that size, the IPO process can be complicated and subject to delays. The Alibaba IPO has already been delayed once, as many had projected the company would make its debut in early August.
The IPO process is not only a long one, it can also be a bit secretive to prospective investors.
Much of the process happens behind closed doors, as the company and the underwriters work to finalize the financial documents and the timing of the deal. For months, investors are left in the dark and hear only leaked rumors.
When the IPO prospectus is filed, however, investors get a peek inside the company.
That's exactly what analysts and investors got on May 6 when Alibaba officially filed for its IPO. The IPO filing revealed many of the company's financial figures, the underwriters on the deal, and the company's biggest shareholders, along with many other insights.
After sending the IPO filing to the U.S. Securities and Exchange Commission (SEC), Alibaba updated its filing about one month later after the SEC requested a revised document.
Since then, the only major announcement from Alibaba officials is that the IPO will take place after Labor Day.
And while we still don't know the specifics of the Alibaba IPO date, we have been able to gauge the timeline for the next major events. Remember, the IPO process can change at any time, but here's what we do know...
Countdown to Alibaba IPO Date: What to Expect in the Weeks Before Trading
IPO Roadshow - 2 to 4 Weeks Before Trading: The roadshow period is one of the most important parts of the IPO process. It's when company officials travel around the world and make presentations to various analysts, hedge funds, and any other potential investors in order to ramp up excitement prior to the IPO. For weeks, these presentations will be held and act as glorified sales pitches. Alibaba stock, of course, is the product being pitched.
The size and scope of the roadshow typically depends on the size of the IPO. Investors can expect the Alibaba IPO roadshow to span the globe.
Final Date Announcement - 1 Week Before Trading: Typically, companies announce the official date that shares will begin trading the week before the stock debuts. Again, this can change according to the company, but one week is a good barometer. At this time, the company will also announce a price range for its shares. This gives investors an update on how much money the company plans to raise through its IPO.
In its IPO filing, Alibaba set its IPO target price at $1 billion. At the time, everyone knew that was just a placeholder, but the company has not updated the figure since. That's why the price range, and number of shares to be sold, is such coveted information.
After completing its roadshow, Alibaba will have a much clearer picture of where its shares should be priced.
Final Documents - Within 1 Week of Trading: Any final documents that need to be filed by the company will be sent in the final week. One example is a Free Writing Prospectus, which describes any changes the company may have had since its updated filing. However, these are uncommon. Companies usually don't make large changes leading up to an IPO.
Other documents including a Form 8-A and an Acceleration Request are filed to the SEC in the days before the IPO. These are a formality and are usually approved. At this point, the company has been working the SEC for months, so there is not much new information to disclose.
IPO Pricing - 24 Hours Before Trading: Typically, the offer price for shares will be announced the day before shares begin trading. At this point, investors will know exactly how much money the IPO raised and how many shares were sold.
The Alibaba offer price is extremely important for the stock's early performance. If shares are underpriced, investors will rush into the stock, driving the price much higher. If shares are overpriced, the stock will fall in its first day, which is an awful first impression for a new stock.
It's important to note that in an IPO, the newly public company has offered the shares to its underwriters, which then sell the shares on the first day. Therefore, Alibaba won't want to price its shares so low that it misses out on money from its underwriters. It also doesn't want to price them so high that the stock dips on the first day.
Setting the offer price is the culmination of the entire IPO process. All that's left is for the shares to begin trading.
The best news about this looming IPO is that it has created a major profit opportunity that most investors haven't yet noticed... It's happening now, weeks before Alibaba hits the market...
In fact, this could be your one and only chance to make the kind of gains normally reserved for the high-net-worth investors and bankers. And there are three ways to play. You can learn more about this Alibaba profit opportunity here.
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